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The numbers: U.S. consumer prices climbed 0.4% in September, the Labor Department said Thursday. While the pace is softer than the 0.6% gain in the prior month, it was hotter than forecast.
Economists polled by The Wall Street Journal had estimated a 0.3% advance in September.
The rate of inflation in the 12 months ended in September remained steady at 3.7% rate from August. Economists were expecting a 3.6% increase.
The closely-watched “core” measure of inflation that omits volatile food and energy rose 0.3 in September for the second straight month. That was in line with forecasts.
The 12-month core decelerated to 4.1% from 4.3%. That matched expectations.
Key details: Shelter costs were the largest contributor to the gain, accounting for over half the increase, the department said.
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The cost of gasoline was another major contributor.
The energy index rose 1.5% over the month. The food index rose 0.2% for the third straight month.
The core was boosted by rent, hotels, motor vehicles and recreation. The index for used cars decreased over the month.
Big picture: Inflation has come down sharply over the past year, but there is a sense that the last leg back to the Fed’s 2% target may be harder.
Economists still think the Fed will be on hold at their meeting in early November.
Market reaction: Stocks were set to open higher on Thursday while the 10-year Treasury note yield rose to 4.59%.
